The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has retained the monetary policy rate (MPR) at 26.5 per cent, adopting a cautious posture in its management of inflation.
Governor of the CBN and Chairman of the MPC, Yemi Cardoso, attributed the decision to renewed geopolitical tensions in the Middle East, persistent food inflation and the need to protect the gains already made in price stability. He said that “while headline inflation moderated marginally in June, uncertainty arising from the renewed conflict in the Middle East warranted a cautious policy approach.”
The committee also kept the asymmetric corridor around the MPR at +500/-100 basis points, and retained the cash reserve ratio at 45 per cent for deposit money banks, 16 per cent for merchant banks and 75 per cent for non-TSA public sector deposits.
Headline inflation eased slightly to 15.91 per cent in June 2026 from 15.93 per cent in May, ending three straight months of increases. Food inflation, however, quickened to 17.52 per cent from 16.96 per cent on the back of supply constraints and higher transport costs, while core inflation slowed to 15.92 per cent from 16.82 per cent, aided by exchange rate stability.
The MPC noted that Nigeria’s economy remained resilient, with real gross domestic product expanding by 3.89 per cent in the first quarter of 2026, driven mainly by the non-oil sector. The Composite Purchasing Managers’ Index returned to expansion at 50.1 points in June, up from 49.6 points in May.
External reserves rose to $52.52 billion as of July 17, 2026, enough to cover about 11 months of imports and up from $50.47 billion at the end of May. The committee said reserves had grown by more than $26 billion since their 2016 low, reaching their highest level in about 17 years.
On claims that the naira was undervalued at about N1,385 to the dollar, Cardoso dismissed the assertion, insisting the bank would sustain a transparent, liquid and market-driven foreign exchange market anchored on a willing-buyer, willing-seller basis. He said long-term stability would depend on stronger crude earnings, higher foreign direct investment, improved domestic productivity and reduced import dependence.
Cardoso also introduced the Nigeria Official Overnight Rate (NOFA), which he said would replace judgment-based benchmarks with transaction-based pricing in the interbank market, aligning Nigeria with global practice much like the shift from LIBOR to risk-free reference rates. He further played down concerns over a decline in bank credit following the withdrawal of pandemic-era forbearance, and assured Nigerians that the banking system remained safe and sound despite recent licence revocations.
Source: The Guardian.
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